Commercial properties can be financed through nine principal channels: balance-sheet banks, credit unions, agency lenders (Fannie Mae and Freddie Mac, for multifamily), SBA 504 and 7(a) programs (for owner-users), CMBS conduit loans, life insurance companies, private debt funds, bridge lenders, and seller-side structures such as seller financing and ground leases. Which one fits depends on the asset class, your hold period, whether you occupy the building, and how much structure you can tolerate. In 2026, most stabilized commercial deals underwrite to a 1.20–1.30x debt service coverage ratio at 55–70% loan-to-value. This guide walks the full taxonomy, lender by lender, with the terms each actually quotes.
Banks and credit unions: the default channel
Commercial banks remain the volume channel for NYC commercial mortgages: 5–10 year terms, 25–30 year amortization, recourse or partial recourse for private borrowers, and 2026 underwriting at roughly 55–65% LTV with a 1.25x DSCR floor. Regional and community banks price relationship deposits into the spread, which is why experienced NYC borrowers move their operating accounts to their lender. Post-2023 regional-bank stress made banks more selective — office collateral in particular draws lower proceeds and more structure — but for stabilized multifamily, retail, and industrial, banks are still the first call.
Credit unions are the under-used variant: member-owned, exempt from certain banking constraints, frequently willing to lend without prepayment penalties, and competitive on sub-$20M loans. For borrowers whose deal size sits below institutional radar, a credit union quote is often the best proceeds-to-rate combination available. The NYC-specific lender landscape — which institutions are actually quoting which asset classes — is covered in our companion piece on financing commercial real estate in NYC.
Agency debt: the multifamily machine
For stabilized multifamily — and only multifamily — Fannie Mae and Freddie Mac lending programs are usually the best execution in the market: up to 65–75% LTV, 30-year amortization, 5–30 year terms, non-recourse with standard carve-outs, and pricing below comparable bank debt. Both agencies discount rates further for mission-driven affordability — a meaningful factor in NYC, where rent-stabilized units can qualify a property for affordability pricing. The trade-offs are process (60–90 day executions, heavy third-party diligence) and prepayment structure (yield maintenance or defeasance rather than simple step-down penalties). For any NYC multifamily acquisition that is stabilized and 90%+ occupied, agency should be the benchmark every other quote is measured against.
SBA 504 and 7(a): the owner-user path
If your business will occupy at least 51% of the building, the SBA changes the math entirely. The 504 program stacks a bank first mortgage (50% of cost) with a fixed-rate SBA debenture (up to 40%) so the owner puts down as little as 10% — leverage no investor loan approaches — with 20–25 year fully amortizing terms. The 7(a) program is more flexible (real estate plus working capital, up to $5M) at floating rates. For NYC businesses tired of watching commercial rents compound, SBA financing is the mechanism that converts rent into equity; we walk the rent-versus-own math in buying vs. leasing commercial space in NYC. The constraint: owner-occupancy is strictly enforced, so pure investors need not apply.
CMBS and life companies: institutional fixed-rate capital
CMBS conduit loans securitize commercial mortgages into bonds: 10-year fixed-rate, non-recourse, interest-only periods common, 65–70% LTV, and proceeds often above what banks quote on the same asset. The costs are inflexibility — defeasance to prepay, servicer bureaucracy instead of a relationship banker — and a diligence-heavy 60–75 day execution. CMBS suits long-hold borrowers who want maximum non-recourse proceeds and will not need to restructure mid-term.
Life insurance companies sit at the opposite corner: the lowest rates in commercial lending at conservative 50–60% LTV, 10–30 year terms, and a strong preference for high-quality stabilized assets — trophy retail, credit-tenant industrial, Class A multifamily and office. A life-co quote is a quality signal in itself; if your asset draws one, your refinancing risk is effectively solved for a decade or more.
Debt funds and bridge lenders: financing the business plan
Private debt funds and bridge lenders finance what banks cannot: vacancy, lease-up, repositioning, construction completion, and transitional business plans. Terms in 2026 run floating-rate at roughly SOFR + 250–500 basis points depending on asset and leverage, 1–3 year terms with extensions, up to 70–80% of cost, non-recourse with carve-outs, and future-funding facilities for capex. This is the capital behind NYC's office-to-residential conversion wave — conversion buyers borrow bridge-to-construction debt against the residual value, then refinance into permanent debt at stabilization. The scale is real: the 6 East 43rd Street conversion, which Skyline sold to Vanbarton Group for $135M, carries a $300M Brookfield construction facility — more than twice the acquisition price, sized to the business plan rather than the purchase.
The discipline bridge debt demands is exit math: every bridge loan is underwritten to a refinance or sale, so the borrower must prove the stabilized DSCR works at exit-market assumptions, not today's. Miss the business plan and the extension tests bite.
Seller financing and ground-lease structures
Two financing sources sit inside the deal itself. Seller financing — the seller takes back a note for part of the price — bridges valuation gaps in slow markets, defers the seller's taxable gain (installment treatment), and closes without a lender's calendar; it appears most in estate sales and long-held private assets. Ground-lease structures go further: instead of financing the whole asset, the buyer acquires the leasehold while a fee owner holds the land, cutting the capital requirement dramatically — or an owner monetizes land value by selling the fee subject to a long lease. Skyline has brokered ground-lease structures at scale, including the $65M, 99-year ground lease at 236 Fifth Avenue with the Kaufman Organization; the mechanics are covered at our ground lease NYC practice and you can model the economics with the ground lease calculator.
Matching the loan to the deal
The channel follows the asset and the plan: stabilized multifamily → agency; stabilized retail/industrial/office → bank, life co, or CMBS depending on hold period and recourse tolerance; owner-occupied → SBA 504; transitional or conversion → debt fund or bridge; valuation-gap or estate deals → seller structures. Before any application, verify the deal clears a 1.25x DSCR at quoted terms — run it with the NOI calculator — and remember that in 2026 the constraint is usually DSCR, not LTV: at current rates, debt service coverage caps proceeds below the stated LTV ceiling on most low-cap-rate NYC assets. Step-by-step application mechanics are in how to finance commercial real estate in NYC.
How Skyline approaches financing on its deals
Skyline Properties is an off-market investment sales brokerage, not a debt shop — but every off-market deal we structure is built with the financing exit in mind, because a buyer who cannot finance is not a buyer. When we match an asset to an acquirer, the underwriting conversation includes the debt: which channel, what proceeds, what timeline — it is part of why Skyline-brokered deals close. Sellers get buyers whose capital stack is real; buyers get deals structured to be financeable. If you are weighing a sale, a confidential Broker Opinion of Value includes the financing lens buyers will apply to your asset; acquirers can join the buyer network for deal flow matched to their capital.
Frequently asked questions
- What credit and DSCR do commercial lenders require in 2026?
- Institutional lenders underwrite the property first and the borrower second: the standard 2026 floor is a 1.20–1.30x debt service coverage ratio and 55–70% loan-to-value, with borrower net worth roughly equal to the loan amount and liquidity of 6–12 months of debt service. Personal credit matters most on recourse bank loans and SBA deals; agency, CMBS, life-co, and debt-fund loans are non-recourse and lean almost entirely on the asset.
- What is the cheapest way to finance a commercial property?
- For stabilized multifamily, agency debt (Fannie Mae/Freddie Mac) — high leverage, 30-year amortization, below-bank pricing, with further discounts for affordability. For trophy-quality stabilized assets of any class, life insurance companies quote the lowest rates in the market at conservative leverage. For owner-occupants, SBA 504 delivers the lowest all-in cost of ownership because 10% down and long fixed-rate amortization dominate the math.
- Can I buy commercial property with 10% down?
- Only realistically as an owner-user through SBA 504: a bank funds 50%, an SBA debenture funds up to 40%, and the occupying business puts down 10% (slightly more for special-purpose buildings). Pure investment purchases require 30–45% equity in 2026 because DSCR constraints cap proceeds. The other paths to low cash-in are seller financing and ground-lease structures, which reduce the capital required rather than the equity percentage.
- What financing do office-to-residential conversion buyers use?
- Bridge-to-construction debt from debt funds and institutional balance sheets, sized to the total business plan rather than the purchase price, then a refinance into permanent multifamily debt at stabilization. The 6 East 43rd Street conversion Skyline sold for $135M carries a $300M Brookfield construction loan — typical of the structure. The 467-m tax abatement materially improves the stabilized DSCR that permanent lenders underwrite; model it with the 467-m calculator.